You are here
1/1988 DSH Amendment Act 1988
Central Office Instruction
Instruction No. 1
Date of Effect: 19 December 1988
DEFENCE SERVICE HOMES AMENDMENT ACT 1988
Purpose of Instruction
The purpose of this Instruction is to explain the revised arrangements arising from the amendment of the Defence Service Homes Act 1918 (DSH Act) by the Defence Service Homes Amendment Act 1988 (amending Act). References in this Instruction to 'the amended Act' are references to the DSH Act as amended by the amending Act. References to sections and subsections are references to provisions of the amended Act, unless otherwise indicated, and references to clauses and subclauses are references to provisions of the Agreement.
Purposes of Amending Act
2. The amending Act gives effect to the Government's decision to sell to Westpac Banking Corporation:
- the DSH Corporation's portfolio of mortgages and contracts of sale for an amount equal to the face value of those assets; and
- the right to provide Commonwealth-subsidised housing loans to entitled persons under the DSH Subsidy Scheme.
The amending Act also contains the new provisions under which the DSH Insurance Scheme now operates.
Commencement of Amending Act (Section 2 of Amending Act)
3. There are three sets of dates on which the provisions of the amending Act commence. These are:
- 19 December 1988 for the commencement of the Subsidy Scheme and the Insurance Scheme
- between 12 January 1989 and 18 April 1989 for the transfer to Westpac of the Corporation's assets; and
- a date to be determined for the winding-up of the Corporation.
Further information relating to the commencement of various provisions of the amending Act is provided in the part of this Instruction dealing with transitional arrangements.
Main Features of Subsid Scheme
4. Under the new arrangements, Westpac is responsible for all lending. There is no waiting period for DSH loans from Westpac, entitled homebuyers are guaranteed access to a fully portable loan of up to $25,000 subject to the relevant lending criteria and amounts in excess of the subsidised $25,000 can be borrowed on first mortgage terms.
5. Westpac also is responsible for all conveyancing and mortgage management activities on DSH loans it makes and on the Corporation's mortgages and terms contracts once they have vested.
6. The Commonwealth's main responsibilities under the Subsidy Scheme are:
- the determination of entitlement to assistance under the Scheme:
- the payment of subsidy in relation to both the vested assets and those new loans made by Westpac: and
- the monitoring of the operation of the Subsidy Scheme including Westpac's involvement.
7. The announcement by the Government of the sale of the Corporation's assets and the right to future lending included a commitment that eligible persons and borrowers would not be disadvantaged under the new arrangements and that existing benefits would be substantially preserved. This commitment has been met and, in addition, the amending Act and the Agreement with Westpac provide for a considerable enhancement of the benefits presently available.
Relationship of Act and Agreement
8. The amended Act deals primarily with the relationship between the applicant or borrower and the Commonwealth. It sets out the criteria which must be satisfied for a person to receive DSH assistance, specifies the forms of assistance available and authorises the provision of assistance (mainly interest subsidy) in respect of persons entitled. It also provides, in certain circumstances, for the termination of subsidy and recovery from the borrower of amounts already paid.
9. The Agreement, included as Schedule 1 of the amended Act, sets out the arrangements for the sale of the Corporation's mortgage portfolio and lending rights to Westpac Banking Corporation and regulates the relationship between the Bank and the Commonwealth under the Subsidy Scheme. It stipulates the rights and obligations of both parties both in respect of the sale and the operation of the Subsidy Scheme and the remedies available in the event of a failure by either party to meet those obligations.
10. Under the Agreement, Westpac's primary obligation is to make subsidised advances to persons determined to be entitled under the amended Act while the Commonwealth's is to pay subsidy to Westpac in respect of such loans and the vested assets.
11. The Subsidy Scheme is set out in Parts III, IV and V and in certain sections of Part VIII of the amended Act and in clause 11 of the Agreement. The principal matters dealt with under the relevant provisions of the amended Act are:
- the process of applying for assistance;
- the determination of entitlement to and assessment of assistance; the granting and provision of assistance;
- the cancellation and recovery of assistance where appropriate; and
- the arrangements for appeals against adverse decisions.
Determination of Entitlement (Sections 17 to 23 and Clause 7)
12. Under the amended Act, a person's entitlement to a particular form of assistance is evidenced by a certificate of entitlement to that assistance. With one exception, a person is able to apply at either a DSH Office or a Westpac Branch for assistance. The exception is instalment relief which can be applied for only at a Westpac Branch. All applications lodged at Westpac Branches will be forwarded to the relevant DSH Office (section 15).
13. Each form of assistance available under the amended Act has a counterpart under the present Act and, in each case, the entitlement criteria to be applied is unchanged substantially from the previous Scheme. However, certain criteria previously authorised by Ministerial Directions or contained only in General Orders are now incorporated in the Act itself. It also should be noted that an amendment to section 4AAA has effected the Government's decision to withdraw eligibility from those whose first service in the Defence Force began after 14 May 1985.
14. Where a person is determined to be entitled to assistance, a certificate of entitlement to that assistance is issued to that person. Provision of assistance to the person is dependent upon the person providing the certificate to Westpac and upon Westpac taking the appropriate action, usually the making of a loan. The only circumstance in which Westpac is able to decline to act on the certificate is where the applicant fails to meet the lending criteria set out in Schedule C to the Agreement.
Notices of Eligibility (Section 16)
15. A person may seek to have his or her status as an eligible person (as defined in the Act) determined, without having to make an associated application for assistance. The amended Act provides that where a person successfully applies for such a determination, a notice of eligibility, stating that the person is on the date of the notice an eligible person, is to be issued to the person. Should the person cease to be an eligible person (e.g. a widow re-marrying) before an application for a certificate of entitlement is made, the notice ceases to have effect.
Certificates of Entitlement (Sections 17 to 23 and Subclauses 7.2 and 7.3
16. A certificate of entitlement deals with either the making or the transfer of a subsidised advance or the granting of instalment relief. The principal matters which must be specified in a certificate relating to a subsidised advance are:
- the amount in respect of which subsidy is payable;
- the maximum term of the advance; and
- the interest rate to be paid by the borrower.
A certificate relating to instalment relief must specify the amount by which the instalments are to be reduced and the period during which the reduction is to apply.
17. With some minor changes, the current policies in relation to the maximum amounts of advances, the periods over which advances are to be repaid and the interest rates applicable to second assistance, widows' relief, additional assistance and assistance for essential repairs continue to apply (sections 25 and 31 to 36).
Service of Notices and Certificates
18. The arrangements for provision of certificates and notices under the amended Act to individual persons are comprehended by section 28A of the Acts Interpretation Act which provides that any such document may be served:
- by delivering it to the person personally; or
- by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document.
The arrangements for the delivery of notices and other communications between the Commonwealth and Westpac are addressed in clause 22 of the Agreement.
Forms of Assistance
Interest Subsidy (Section 24 and Clause 11)
19. The main form of assistance to be provided under the Subsidy Scheme is the interest subsidy. The subsidy payable on each advance is the difference between the fixed concessional interest rate and a variable benchmark interest rate determined monthly in accordance with the.Agreement. Subsidy is payable monthly. The types of advances on which subsidy is payable and the concessional interest rates to apply are as follows:
- amounts outstanding under Corporation mortgages and contracts of sale - existing interest rates (section 24);
- initial advances (i.e. advances to persons not previously assisted) - 6.85% (section 31);
- further advances (i.e. advances made under the portability policy or second assistance policy) - the interest rates applicable to the balance outstanding at discharge of the previous advance and 10% in relation to any additional amount advanced (section 34);
- widows advances (previously widows relief) - 3.75% (section 32);
- additional advances (previously additional assistance) - 10% (section 33); and
- essential repairs advances (previously amounts expended by the Corporation under section 31) - 10% (section 35).
Second Assistance (Section 19)
20. Where a person has received an advance which was applied for before 9 December 1987 and is for a term of more than 25 years, the current second assistance policy continues to apply to the making of a second advance to that person for another home and the minister's approval of the issuing of a certificate of entitlement for such an advance, under section 19 of the amended Act, is required. However, any such further advance, once made, is fully portable.
Instalment Relief (Section 23 and Subclause 8 4)
21. Instalment relief continues to be available to borrowers according to the same policy as at present with the proviso that Westpac is able to refuse such relief if its grant would mean a failure to satisfy the lending criteria in Schedule C to the Agreement. In the event of such a refusal, the Agreement provides for Westpac to resolve the case with the Commonwealth. As at present, the granting of instalment relief may include the capitalisation of arrears which already have accrued.
Transfers of Property (Section 22 and Subclause 8 5)
22. It remains a Commonwealth responsibility to determine whether a property which is the subject of a subsidised advance may be transferred to another person. The current policy on transfers continues to apply and, where the transfer is approved, a certificate of entitlement is issued to the transferee. The provisions dealing with transfers will not interfere with the exercise by the Bank of its powers under the mortgage or, where the borrower dies, with the transmission of the property to the executor or administrator of the estate.
Bankruptcy Protection (Section 45A)
23. Now that the Corporation will no longer be mortgagee, it has been necessary to reformulate the bankruptcy protection provisions of section 33 of the Act. Under section 45A of the amended Act, the interest of a person in a property that is the subject of a subsidised advance or a vested asset cannot be taken from that person under the Bankruptcy Act or sold in satisfaction of a judgement debt, without the approval of the Secretary, unless action in relation to a judgement debt is being taken by Westpac or another mortgagee under the terms and conditions of a mortgage. The present policy in relation to the Corporation's actions in cases involving bankruptcy or insolvency continues to apply in relation to the application of the Secretarial discretion under the new provisions.
Subsidy on Arrears (Definition of "Subsidy" and Subclauses 7 12 and 11.9
24. The Commonwealth also will be paying subsidy on arrears in accordance with the formula set out in the Agreement. The formula provides for subsidy to be paid only on that amount of arrears which does not exceed 0.035% of the aggregate of the limits on all subsidised advance loan accounts. In general terms, the limit is the amount which would be outstanding on a loan at a given point in time if all repayments to that point had been made as scheduled.
Excess Credits ( Clause 9)
25. The choice of two forms of excess credit arrangements is available to borrowers under the Subsidy Scheme - a loan interest offset arrangement or a banking account. In the event of a borrower failing to exercise a choice, the Bank will provide a a loan interest offset arrangement. This also applies to the transfer to Westpac of existing excess credits upon vesting.
26. The main distinguishing features of the loan interest offset arrangement are that excess credits are applied to reduce the principal outstanding in the loan account (on a pro rata basis where more than one interest rate applies to the loan) but may be drawn on where the outstanding balance is less than the limit.
27. The banking account is an interest-bearing deposit account with funds available at call and bill-paying and direct credit facilities. The purposes for which withdrawals may be made under either excess credit arrangement are specified in Schedule E of the Agreement and are substantially the same as those specified in section 29 of the previous Act.
28. A borrower also may elect to make a prepayment, outside of the excess credit arrangements, in addition to the normal monthly instalment. Although the effect of such a prepayment will be to reduce the outstanding balance, it will not affect the instalments payable but will reduce the period over which the loan is repaid.
Cancellation and Recovery Provisions (Sections 26 27 29 and 30 and Subclauses 11.15 and 11 16)
29. An essential element of any system of regular payment of assistance is the ability of the paying authority to terminate those payments were the recipient is determined to be no longer entitled to the assistance. It also is desirable to have the power to recover any amounts paid when no entitlement existed. Both these elements are incorporated in sections 26, 27 and 29 of the amended Act – the cancellation and recovery provisions of the Subsidy Scheme.
30. The reasons for which subsidy may be cancelled are substantially the same as the reasons for which an advance may be called up under the previous provisions of the Act and are as follow:
(a) the obtaining of a certificate of entitlement or assistance under the previous provisions of the Act because of a false statement;
(b) the obtaining of a certificate of entitlement or assistance under the previous provisions of the Act although not entitled;
(c) the use of a subsidised advance or assistance obtained under the previous provisions of the Act for a purpose other than that for which it was made;
(d) failure, without reasonable excuse, by a person to whom a property the subject of a subsidised advance or a vested asset has been transferred to comply with an undertaking given to the Secretary under subsection 22(2) or to the Corporation under the previous subsection 35(2) of the Act;
(e) an agreement or arrangement to transfer a property the subject of a subsidised advance or a vested asset without the consent of the Secretary (where section 22 requires such consent);
(f) failure by Westpac to recover the outstanding balance secured under a subsidised advance or vested asset within three months of starting action to enforce the security (only where the action is started for a reason other than the receipt of a notice of intended cancellation of subsidy); and
(g) the marriage or the commencement of a de facto relationship by a man and a woman where subsidy already is being paid in respect of both.
31. Where a decision is taken to cancel subsidy, a notice of cancellation specifying the date of the cancellation must be given to the person whose subsidy is being cancelled and to Westpac. The date from which the subsidy ceases to be payable (the cancellation date) will depend on the reason for the cancellation and whether the subsidy is being paid on a subsidised advance or a vested asset.
32. Where the cancellation is in relation to a vested asset, and is for a reason other than that specified in subparagraph 30(f) above, one month's notice of the intended cancellation must be given to Westpac. (The Act requires such notice to be given only in relation to cancellations for reasons specified in subparagraphs 30(a), (b), (c), and (d) above but subclause 11.16 of the Agreement requires such notice also for cancellations for reasons specified in subparagraphs 30(e) and (g) above.)
33. Subclause 11.16 provides that, if before the end of that one month period, Westpac gives notice that it intends to take action to enforce its security, then subsidy shall continue to be paid until Westpac discharges the loan or for three months from the date of Westpac's notice, whichever is earlier. If no such notice is given by Westpac within the one month notice period, subsidy may be cancelled at the end of that month. Where a notice of intended cancellation is given to Westpac, a copy of the notice must be given also to the person for whom the subsidy is being paid. The copy of the notice provided to the person should be accompanied by a notice advising the person that the subsidy is to be cancelled on a date either:
- one month from the date of the notice, if during that month Westpac does not advise the Commonwealth of an intention to take action to enforce its security; or
- if Westpac provides such notice, three months from the date of Westpac's notice unless the advance is discharged within those three months.
A follow-up notice should be given to the person when the actual date of cancellation becomes known.
34. Where the cancellation is in relation to either:
- a subsidised advance, for any reason specified in paragraph 30 above; or
- a vested asset, for the reason specified in subparagraph 30(f) above,
the cancellation date specified in the notice may be a date not earlier than the date of the notice. Although Westpac should be informed of the cancellation, in such cases neither the Act nor the Agreement requires advance notice to be given or allows Westpac any involvement in the timing of the cancellation.
35. The Act also allows the recovery of overpaid subsidy from borrowers in certain circumstances. Where a decision is made to recover subsidy from a borrower, a notice in writing must be given to the person requiring the person to pay to the Commonwealth the amount specified in the notice in the manner and within the period specified in the notice. A copy of the notice also must be given to the Westpac. A delegate may allow the person to pay the amount by instalments (with the instalment amount determined by the delegate).
36. The circumstances in which such action may be taken and the amounts which may be recovered are as follow:
- where subsidy is cancelled for a reason specified in subparagraph 30(a) or (b) - the whole of the amount of subsidy paid;
- where subsidy is cancelled for the reason specified in subparagraph 30(c) - the amount of subsidy paid since the misuse of the advance or assistance; and
- where subsidy is cancelled for the reason specified in subparagraph 30(e) - the amount of subsidy paid since the day when the person agreed or arranged to transfer the property.
However, a delegate may determine it is reasonable to recover a lesser amount than that permitted by the Act and may seek recovery of only that amount.
37. Where a person fails to comply with a notice seeking recovery of subsidy, recovery of the amount as a debt due to the Commonwealth may be sought in a court of competent jurisdiction.
38. Overpaid subsidy also may be recovered from the proceeds of a sale resulting from the enforcement by Westpac of its security. Where a delegate has given a person a notice of recovery and Westpac has sold the property in respect of which subsidy was being paid, the Bank is obliged to pay to the Commonwealth:
- the part of the proceeds of sale that otherwise would have been paid to the person; or
- such part of the amount specified in the notice of recovery that remains unpaid,
whichever is less. Any such payment by Westpac discharges, to the extent of the amount of the payment, the liability of the person to the Commonwealth and the liability of Westpac to the person.
39. A delegate may write off the whole of an amount that the Commonwealth has sought to recover under section 29 or may waive the right of the Commonwealth to recover the whole or part of that amount. Such a decision must be made by instrument in writing and is effective from either:
- the date specified in the notice (which must be the date of the decision or a later date); or
- if no date is specified in the instrument, the date of the decision.
40. The amended Act contains new provisions providing for appeals by persons against adverse decisions under the Act.
Appeal Structure (Sections 4 43 and 44 and Subclauses 11 15 and 11.16
41. The relevant provisions of the amended Act are sections 43 and 44 and the definition of "reviewable decision" in section 4. A reviewable decision is a decision of the Secretary:
- refusing to issue a notice of eligibility or a certificate of entitlement:
- determining under section 25 the amount of advance to be subsidised;
- cancelling subsidy under section 26;
- giving Westpac a notice of intended cancellation of subsidy under section 27;
- requiring a person to pay an amount the recovery of which is sought under section 29;
- determining the maximum term over which an advance will be subsidised;
- refusing to extend the period for making an application for review under section 43; or
- giving, or refusing to give, an approval under section 45A in relation to the estate or interest of a person who becomes bankrupt or incurs a judgement debt.
A refusal under section 19, by the Minister or a ministerial delegate, to give approval to second assistance also is reviewable.
42. The appeal structure imposed by these provisions is as follows:
(a) for a reviewable decision by a delegate of the Secretary:
(i) the making of the reviewable decision;
(ii) as soon as practicable thereafter, the provision of a notice in writing to the person whose interests are affected by the decision containing:
- the terms of the decision;
- the reasons for the decision; and
- a statement setting out the particulars of the person's right of review (subsection 43(1));
(iii) application in writing, if the person so chooses, to the Secretary, within 30 days of the person being advised, for a review of the decision (subsections 43(2) and (3));
(iv) review of the reviewable decision by the Secretary or a delegate with the power of review (the review delegate), being a person:
- not involved in the making of the reviewable decision; and
- in a position senior to that of the person who made the reviewable decision (subsection 43 (4)) ;
(v) affirmation, variation or revocation by the delegate of the reviewable decision and, if revocation, the making of such other decision as the review delegate thinks appropriate (subsection 43 (6));
(vi) where a decision (the review decision) is made affirming or varying the reviewable decision, the provision of a notice in writing to the person containing:
- the terms of the review decision;
- the reasons for the review decision; and
- a statement setting out the particulars of the person's right to apply to the Administrative Appeals Tribunal (AAT) for a review of the review decision (subsection 44(1)); and
(vii) application, if the person so chooses, to the AAT for a review of the review decision (subsection 44(3));
(b) for a reviewable decision made by the Secretary personally:
(i) the same steps as in points (i) to (iii) of paragraph 41(a) above;
(ii) referral to the Minister, by the Secretary, of the application for review (subsection 43(5));
(iii) review of the decision, by the Minister affirming, varying or revoking the decision and, if revocation, the making of such other decision as the Minister thinks appropriate (subsection 43 (6));
(iv) the same steps as in points (vi) and (vii) of paragraph 41(a) above;
(c) for a decision by the Minister or his delegate refusing to give an approval under section 19 (i.e. in relation to second assistance):
(i) the making of the decision;
(ii) the provision of a notice in writing to the person whose interests are affected by the decision containing:
- the terms of the decision;
- the reasons for the decision; and
- a statement setting out the particulars of the person's right to apply to the AAT for a review of the decision (subsection 44(1)); and
(iii) application if the person so chooses, to the AAT for a review of the decision (subsection 44(3)).
43. This Instruction does not address the steps to be followed once an application for review has been lodged with the AAT. Advice on this stage of the appeal process and on the giving of reasons for decisions will be provided in a further Instruction.
44. The period of transition from the arrangements under the present Act to the fully operational Subsidy Scheme will extend from the date of the commencement of the provisions establishing the Scheme to the date of the winding-up of the Corporation. There will be a number of phases during the transitional period, some overlapping. These are:
- the hand-over phase - the three-week period immediately following the commencement of the Scheme;
- the final settlements phase - the four-week period immediately following the commencement of the Scheme;
- the commencement phase - extending in each State from the commencement of the Scheme to the vesting of the Corporation's assets in that State;
- the vesting phase - the period over which vesting of the Corporation's assets will take place; and
- winding-up - the date on which the provisions of the present Act establishing the Corporation and its financial arrangements will be repealed.
The Hand-Over Phase (Subsection 18(2) and Section 19 of the Amending Act and Subclauses 5.1)
45. The hand-over phase is the period during which uncompleted applications to the Corporation for advances from persons not previously assisted or for second assistance are to be delivered to the Bank. An uncompleted application is one lodged before the commencement date of the Scheme and in respect of which a mortgage remains to be executed. Clause 5 of the Agreement provides for such applications to be treated as applications for certificates of entitlement in respect of initial advances or further advances, as appropriate.
46. Clause 5 provides for the Corporation to determine each such application and, if it is approved, to provide a certificate of entitlement along with the application and relevant documentation to Westpac. Any investigations or loan approvals, including terms and conditions (such as interest rates), already made by the Corporation before the commencement date will be accepted by Westpac.
47. The three-week duration of the hand-over phase is not specified in the Agreement but has been agreed upon in negotiations with Westpac.
The Final Settlements Phase (Section 19 of the Amending Act and Subclause 5.1.4)
48. Subclause 5.1.4 of the Agreement allows Westpac to notify the Corporation where it is unable to effect settlement on an application which was due for settlement by the Corporation in the four week period from the commencement date. In any such case the Corporation will make the advance and the mortgage taken to secure the advance will be included in the assets to be vested in Westpac.
49. Westpac has advised that it will be unable to effect any settlements during the first four weeks. Accordingly, any applications due for settlement in that period will not be handed over to Westpac and the advances in those cases will be made by the Corporation on the scheduled settlement dates.
The Commencement Phase (Sections 10 and 17 of the Amending Act)
50. From the commencement date of the Subsidy Scheme, the Commonwealth will accept and process:
- applications for notices of eligibility; and
- applications for certificates of entitlement in respect of:
- initial advances and further advances; and
- additional advances, widows' advances, essential repairs' advances, instalment relief and transfers of property - but only in cases where Westpac has made an initial advance or a further advance.
Those provisions of the amended Act which apply to such cases will become fully operational from the commencement date.
51. During the commencement phase, the present Act will continue to apply in relation to assets not yet vested in Westpac. The Corporation will maintain its normal mortgage management functions in Relation to those assets and clients whose mortgages or contracts have not yet vested will be able to seek and obtain the full range of ancillary benefits under the present Act. The only two functions under the present Act which the Corporation will cease to perform from the commencement date (except in relation to those applications to be settled in the final settlement phase) are the approval and granting of advances to persons not previously assisted and second assistance.
The Vesting Phase ( Section 6B and 6C and Section 19 of the Amending Act and Clauses 3 and 4 and Subclause 5.2)
52. Clause 4 of the Agreement provides for Westpac to nominate the date in each State and Territory on which it wishes the Corporation's assets in that State or Territory to be vested. The earliest dates which Westpac may nominate are specified in sub-clause 4.6 and fall between 15 January and 15 April 1989, inclusive. However, section 6B of the amended Act empowers the Minister to determine vesting dates which may differ by up to three days from the dates notified by Westpac. Vesting will take place on the dates determined by the Minister.
53. Any applications for ancillary benefits under the present Act, on which some action remains outstanding at the vesting date in a particular State, will be treated in a similar manner to applications for advances not settled at the commencement date. Clause 5 of the Agreement provides for such applications to be treated as applications for certificates of entitlement in respect of the corresponding form of assistance under the amended Act.
54. Clause 5 provides for the Corporation to determine each such application and, if it is approved, to provide a certificate of entitlement along with the application and relevant documentation to Westpac. Any investigations or approvals, including approvals of terms and conditions of advances, already made by the Corporation before the commencement date will be accepted by Westpac.
55. The Corporation's activities under the present Scheme will cease in each State and Territory on the day before the vesting date for that State or Territory.
Winding-Up (Section 15 of the Amending Act)
56. The only provisions of the present Act which will remain in operation after the final vesting date are those dealing with the establishment, conduct of affairs and financial arrangements of the Corporation. These will be preserved temporarily to enable the Corporation to finalise any residual matters remaining outstanding after the Subsidy Scheme becomes fully operational. once the Corporation has completed its final activities, those provisions will be repealed and the Corporation will cease to exist.
57. Section 6D of the amended Act provides that, upon the winding-up of the corporation, any rights, debts, involvement in contracts or legal proceedings, and interest in land, which have not vested in Westpac and do not relate to the Insurance Scheme, vest in the Commonwealth.
58. A number of savings provisions are contained in section 18 of the amending Act, the purpose of those provisions being to preserve certain powers and arrangements provided for under the previous Act. The matters being saved are:
- the protection given by the previous section 17B to ensure that State or Territory laws relating to the building of homes do not affect a person who has acquired an interest in a home built by the Corporation;
- the terms and conditions of an advance approved by the Corporation before 19 December 1988 but made by Westpac;
- contracts of insurance, in relation to dwelling-houses in which the Corporation has an interest, taken out under the previous subsection 38(4D) with persons with whom the Corporation has entered into concessions agreements (this saving provision ceases to apply to a property once the property has vested in the Commonwealth or Westpac);
- insurance which is deemed to have been taken out under regulation 45 with the Corporation in relation to dwelling-houses in which the Corporation has an interest but which are not otherwise insured (this saving provision ceases to apply to a property once the property has vested in the Commonwealth or Westpac); and
- the provisions of the previous subsection 36(2) and section 39C which enable the appropriation from Consolidated Revenue and disbursement by the Corporation of the proceeds of sales of properties sold on terms by the Corporation as mortgagee-in-possession (this saving provision ceases to apply upon the winding-up of the Corporation).
INSURANCE (Part VI)
59. New provisions under the amended Act will apply to the operation of the DSH Insurance Scheme with effect from the commencement date of the Subsidy Scheme. The changes arising from the new provisions are as follow:
- a Defence Service Homes Insurance Scheme will be formally established;
- the Corporation will cease to undertake insurance;
- the Commonwealth will undertake insurance and be responsible for the operation of the Scheme; and
- the powers and functions of the Commonwealth under the Scheme shall be exercised by the Secretary of the Department of Veterans' Affairs on behalf of the Commonwealth.
60. All the rights, assets, debts, liabilities and obligations of the Corporation under the present Insurance Scheme will be vested in the Commonwealth from the commencement date. There will be no other changes to the existing insurance arrangements or eligibility criteria (with one minor exception specified in the part of this Instruction dealing with changes related to the Sex Discrimination Act) and the Scheme will continue to operate as a completely self-funded venture.
Delegating Authorities (Sections 6 and 6A)
61. The authority responsible for the administration of the amended Act is the Secretary of the Department of Veterans' Affairs. The powers exercised under the amended Act by State officers will be mainly those delegated by the Secretary. The Minister for Veterans' Affairs also has certain delegable powers under the amended Act but these will be subject to limited use by State officers. The powers of the Secretary in relation to the Subsidy and Insurance Schemes correspond substantially to those of the Corporation under the present Act.
Limitations on Delegations
62. The Minister's power under subsection 19(1) to approve the determination of entitlement to second assistance and the Secretary's power under subsection 23(1) to determine entitlement to instalment relief are delegated to State Managers and their managers. These particular delegations are to be used only to refuse applications by persons who are not entitled under the relevant policy to the assistance being sought. In any such case the decision-maker also will have to provide the applicant with written reasons for the decision and a statement of the person's appeal rights, in accordance with subsection 43(1) or 44(1), whichever applies. Any second assistance or instalment relief requests which appear to warrant approval are to continue to be forwarded to Central Office for determination.
63. Certain of the Minister's and the Secretary's powers will not be delegated to State Offices. Some of these powers will be used only by the Minister or the Secretary and the remaining powers are delegated only within Central Office. The powers falling into the latter category are as follow:
- approval of forms for applications for notices of eligibility and certificates of entitlement (subsection 15(2));
- entry into concessions agreements under the Insurance Scheme (subsection 38C(3)); and
- entry into reinsurance contracts and arrangements (section 38F).
64. The amending Act will provide that the previous scheme will continue, in parallel with the new scheme, until the vesting of the Corporation's assets in Westpac has been completed. The existing delegations of the Corporation's powers therefore will remain current in each State and Territory and will continue to be used until vesting in that State or Territory has been completed. Once that occurs, the provisions of the Act dealing with the previous scheme cease to operate and the existing delegations will cease to have effect.
AMENDMENTS RELATED TO SEX DISCRIMINATION ACT 1984
65. Also included in the amending Act is a number of minor amendments to the Act to achieve substantial compliance with the provisions of the Sex Discrimination Act 1984 (SDA). Absolute compliance has not been effected as sections 4 (definition of "eligible person"), 20 (widows advances) and 23 (instalment relief for widows) have been exempted from the application of the SDA.
66. Three minor changes to entitlements under the Act as a result of the SDA-related amendments are as follow:
- the removal of the requirements in the definition of "widow" and in subsections 4(3A) and 4(3B) for a de facto relationship to have existed for three years;
- the entitlement of a widower (as defined in the amended Act) to a certificate of entitlement for subsidy on an additional advance for the purpose of building a garage for a motor vehicle (where the widower is the registered owner of the vehicle but is unable to meet the building cost); and
- the eligibility of the widower of a borrower or purchaser to insure the dwelling-house that is or was the subject of assistance under the Act.
TERMS AND CONDITIONS OF VESTED ASSETS (Schedule 2)
67. The terms and conditions of the mortgages and contracts of sale to be vested in Westpac are contained partly in the security documents and partly in the Act and Regulations. It is not feasible to retain as statutory powers those terms and conditions which currently are in the legislation. Accordingly, the Act has been amended to enable Westpac to administer those provisions simply as terms and conditions of the advances and contracts to which they relate.
68. This has been achieved by including in the Act a schedule (Schedule 2) which identifies those terms and conditions of the vested assets, previously contained in the Act and Regulations, which are to be preserved to enable Westpac's administration of the relevant securities. The schedule shows how the terms and conditions are modified to stand separate from the Act and to be workable in the hands of Westpac.
69. In general, the preserved terms and conditions define the benefit that a person has received, including repayment terms and interest rates and identify the remedies available to Westpac against a person for failing to comply with the terms of a security. Please note that the preserved terms and conditions in their modified form will apply only to assets vested in Westpac and only when the assets have been vested.
70. The amendments to the Act also have the effect of repealing most of the Regulations. Upon vesting, all but six of the present regulations will cease to have effect. Those six regulations which will remain in force are:
- regulations 1 and 2;
- regulation 3 - amended to refer only to Part VIII, regulations 74J and 77;
- regulation 4 - amended to define only "the Act"; and
- regulations 74J (service in Malaya and Singapore) and 77 (signature of Secretary).
71. This Instruction is intended only to provide a summary of the legislative and policy changes arising from the amendment of the Act. A sound understanding of the changes can be gained only from reading this Instruction and the revised General Orders in conjunction with the amended Act, the Agreement and the Explanatory Memorandum.
72. An unofficial loose-leaf version of the amended Act is in preparation and will be provided to staff as soon as copies have been printed. A small number of copies, of the amending Act and the Explanatory Memorandum already have been provided to State Offices. Supplementary Central Office Instructions on certain aspects of the new arrangements also will be provided in the near future.
for General Manager
16 December 1988